Fighting for the Right to Make Big Cars

By Moira Herbst Business Week

With Ads That Pull at the Heartstrings of Truck and SUV Lovers, Automakers Battle Congress' Fuel Economy Bill

It’s an all-American scene: Two men discussing buying a new pickup truck, presumably somewhere in the heartland. After a little chit-chat, talk turns to government regulations. “[Congress] wants to set the same fuel economy standards for pickup trucks as they use for cars,” says a male voice in the radio advertisement, following the sound of a truck engine and clucking chickens. “When you buy that new pickup it’s gonna really jack up the price.”

The ad is part of a campaign by the Alliance for Automobile Manufacturers (AAM), an automakers trade group, to win popular support in their battle against tighter government regulations over fuel efficiency. The radio spots, which kicked off Memorial Day weekend, are designed to appeal to SUV- and truck-loving consumers, warning that possible new laws could raise prices for trucks and make it harder for safety-obsessed families to get bigger cars. The ads come as Congress is considering a bill calling for the first major boost to car fuel economy since 1975.

The $1 million-plus campaign was launched with little fanfare this weekend by the AAM, the trade association that represents General Motors (GM), Ford Motor (F), DaimlerChrysler (DCX), Toyota Motor (TM), BMW (BMWG), and four other automakers. The radio and print advertisements—running in 10 states with high percentages of light truck and SUV owners—urge people to call their representatives in Congress to oppose “extreme fuel mandates.” The states are Arkansas, Delaware, Idaho, Louisiana, Minnesota, Montana, Nebraska, North Dakota, Pennsylvania, and Wisconsin.

Green Measures

Environmental groups like the Sierra Club and the Union of Concerned Scientists are speaking out against the campaign, which they say is dangerously misleading to consumers. “This misinformation campaign is akin to a drug pusher telling people that cutting their addiction is bad for their health,” says David Friedman, research director for the Union of Concerned Scientists’ clean vehicles program. “The automakers are looking into the rearview mirror to another era when we need to be moving forward.”

Because incorporating fuel-efficiency measures into their fleets is more expensive for automakers, they have long advocated other measures including biofuel production and flexible-fuel vehicle production, with controversial results (see BusinessWeek.com, 3/28/07, “The Dirty Secret About Clean Cars"). But now lawmakers, particularly Democrats in Congress, are pushing for tougher fuel-efficiency standards, hoping to pass the first major change in decades.

The Senate will vote in mid-June on a bill that would require automakers to raise fuel economy 40% to a fleetwide average of 35 miles per gallon for passenger cars and light trucks by 2020; the House is working on a separate fuel economy bill; and President Bush has called for 4% average annual fuel economy—increases that automakers call “unattainable.”

In 1975, Congress required automakers to boost fuel economy for cars from 13 mpg to 27.5 mpg in 10 years. Congress hasn’t adopted a fuel economy increase since that ruling.

Targeted Demographic

Truck-driving farmers aren’t the only target audience for the ads; another radio ad appeals to the so-called soccer mom demographic. “To meet new fuel economy standards, the automakers are going to be forced to make smaller and smaller cars,” says a woman to her friend in another radio ad, over the sound of children playing. “Why can’t they let me make the choice?” replies the friend. “I’m all for better fuel economy, but safety is my first concern.”

The AAM launched a Web site (http://www.drivecongress.com) to accompany the campaign, which offers a toll-free phone number and e-mail links for users to contact members of Congress and voice opposition to fuel economy standards.

The AAM could not be reached for comment on May 25 due to the Memorial Day holiday. A spokesman for Ford confirmed that all nine car companies represented by the AAM are “on board” with the advertising campaign, and deferred comment to that organization.

It’s unclear how Americans will respond to the campaign. There are signs that the SUV demand remains resilient despite surging gas prices. While small cars, as a percentage of new car purchases, increased from 21.5% in 2000 to 31.8% so far this year, luxury SUV sales went from 27% to 28%. Some Americans, it seems, remain hooked on big cars. That is certainly the population automakers want to reach with their advertising campaign.